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A Mike Huckabee Presidency Revives Interest in the FairTax — But is it?

Proponents of the FairTax zealously claim it will abolish the IRS, creating a simpler system that is easier to comply with and less intrusive. But abolishing the IRS the FairTax way creates a whole new big bad monster – the Sales Tax Bureau (STB)! The headaches of the “income tax return” are merely being replaced with the headaches of the “family consumption allowance” application.

By Rachel Alexander l June 9, 2015

Former Arkansas Governor Mike Huckabee recently announced he was entering the 2016 presidential race, renewing interest in a tax overhaul proposal he supports, the FairTax. Huckabee posted a pledge on his campaign website that says in part, “I will advocate for a complete overhaul of our tax system. This means passing the FairTax and abolishing the IRS.” The FairTax would eliminate income, payroll, estate and gift taxes, replacing them with a 23 percent national sales tax, something that has gained popularity in recent years due to its ostensible simplicity and broad appeal. Even libertarians have latched onto the idea, because it proposes to transfer the punishing income tax to a tax on consumption.

However, is something labeled as “fair” really about eliminating inequalities in the tax system, or is it more about shuffling tax burdens? Fox News’ Chris Wallace interviewed Huckabee recently and asked him whether the FairTax would hit the poor the hardest, since necessities take up a larger proportion of their income than those who are wealthier. Huckabee responded and said he would give the poor a “prebate” to reduce their burden. The problem with this fix, also known as a “family consumption allowance,” is it destroys the whole notion of one flat tax for everyone – initially the main appeal behind the FairTax.

Proponents of the FairTax zealously claim it will abolish the IRS, creating a simpler system that is easier to comply with and less intrusive. But abolishing the IRS the FairTax way creates a whole new big bad monster – the Sales Tax Bureau (STB)! The headaches of the “income tax return” are merely being replaced with the headaches of the “family consumption allowance” application.

Look at the history of the income tax. It was started with good intentions over 100 years ago with the passage of the Sixteenth Amendment in 1913. Its founders had no idea it would grow into the unfair monstrosity we have today.

Arguably, the worst aspect of the FairTax is that it is probably impossible to fully get rid of the income tax. Even if the Sixteenth Amendment was repealed, which would be nearly impossible today, the government could still enact an income tax in today’s modern era of judicial activist court decisions, without bothering to have constitutional authority. The result, the FairTax would be created alongside the income tax, creating the worst of both worlds – the IRS plus an additional new layer of taxation.

The onus of collecting the FairTax will be placed on businesses – an additional burden on small businesses. There is nothing to stop the government from increasing the rate above 23 percent, especially on higher income groups or on luxury goods and services. The higher the exemption for low-income people, the higher the rate could increase for others.

There is a better alternative, a true flat tax. It does away with the IRS, as we know it, including its onerous, intrusive and enforcement aspects. By cutting the tax code significantly, the punitive IRS will quickly die away. Taxpayers are left with a simple little tax collection agency, requiring far fewer employees, with few other powers, saving the Treasury billions of taxpayer dollars.

Of course, there has to be a collection arm of some sort attached to the process of taxation, no matter whether it is a “flat” or “fair” tax. A true flat tax would collect the money directly from the source, and wouldn’t require tax returns for wage and salary income earners, unless they have “other” income that isn’t collected at the source.

For all intents and purposes, a true flat tax does away with the IRS as we know it, whereas the FairTax replaces the monstrous IRS with a more intrusive and onerous collection arm called the STB. No FairTax supporter is aware of that or is willing to admit it. Nor are they willing to admit the income tax system might not be defeatable, requiring repeal of the Sixteenth Amendment. It is easy to fathom a situation where government promises to eliminate the income tax after implementing a FairTax – then goes back on its word. A flat tax is a simpler, safer, more realistic alternative, and Huckabee would be wise to consider it as well – Ted Cruz and Ben Carson have.